General Securities Representative (Series 7) Practice Exam

Which organization enforces MSRB rules?

1. FDIC

2. FINRA

3. SEC

4. Federal Reserve Board

The correct answer is: FINRA

The Municipal Securities Rulemaking Board (MSRB) is responsible for establishing rules and regulations governing the municipal securities market. While the MSRB itself creates these rules, it is important to note that it does not have enforcement authority. Enforcement of MSRB rules falls to another organization. FINRA, or the Financial Industry Regulatory Authority, plays a crucial role in this context. As a self-regulatory organization, FINRA is tasked with overseeing brokerage firms and their registered representatives, ensuring compliance with various securities regulations, including those set forth by the MSRB. By enforcing MSRB rules, FINRA ensures that market participants adhere to high standards of conduct and maintain fair practices within the municipal securities market. The other organizations listed, such as the FDIC, SEC, and Federal Reserve Board, have different roles in the financial system. The FDIC primarily insures bank deposits, the SEC regulates the securities industry and protects investors but does not enforce MSRB rules specifically, and the Federal Reserve Board oversees the monetary policy of the United States. Thus, FINRA is the correct answer, as it is the organization directly charged with enforcing the rules established by the MSRB.